Enlarge image LONDON (Reuters) - Financier Andrew Regan’s investment vehicle Corvus
Corvus said it had been encouraged by preliminary talks with potential funders of a cash offer, but decided not to continue, given the time constraints under which it would need to proceed.
Corvus, which last year listed on London’s junior stock market, the Alternative Investment Market (AIM), said on June 13 it was considering Royal & Sun, the country’s second-biggest commercial insurer, as a bid prospect.
The company said Royal & Sun was an attractive acquisition opportunity and fitted in with its investment strategy.
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"However, Corvus remains mindful of the complexities inherent in a company operating within the insurance sector such as RSA and, with this in mind, would only have intended to proceed with an offer for RSA with the cooperation of its existing management," the company said in a statement.
This cooperation was not forthcoming.
Shares in Royal & Sun closed at 83-1/2 pence on Thursday, valuing the insurer at just over 2.39 billion pounds, while shares in Corvus ended at 11 pence, valuing it at just over 28 million pounds.
Royal & Sun has been the subject of vague takeover talk since Chief Executive Andy Haste finished a radical restructuring of the group last year after mounting claims and weak investments tore a hole in its finances.
Haste improved RSA’s risk profile and beefed up its balance sheet by selling off non-core assets and pulling out of the life insurance market, but analysts say the group’s continued exposure to potentially large claims in the United States could put off possible buyers.
Corvus listed on AIM last year with the stated intention of investing in cash-generating companies. The company explained a change of strategy in February, saying acquisitions it had made of early-stage investment companies that might list or be bought would generate capital for acquiring an undervalued cash-generating business.
The company said on Friday it was continuing to look at a number of investment and acquisition opportunities.
Regan previously tried to buy Co-operative Wholesale Society in 1997 for 1.2 billion pounds. The bid collapsed after CWS contested it through the courts. Hambros Bank, which advised Regan on the bid, was fined by Britain’s financial regulator over the use of confidential CWS information.
